Apple avoids paying 1.2 trillion yen in tax in Japan

December 27, 2017

The U.S. tech giant Apple’s tax avoidance efforts, mainly with the use of tax havens, reduced the company’s tax payments to Japan by up to 1.2 trillion yen in total over the past ten years, Akahata reported on December 27.

Akahata calculated the figure based on Apple’s annual financial reports and a U.S. Senate committee report on Apple’s offshore profit shifting (May 2013) with help from a manager of the tax affairs division at one of the four major accounting firms in the world.

According to Apple’s financial reports, the company sold 11.5 trillion yen worth of its products in total in Japan between FY 2008 and FY 2017, generating an operating profit of 4.1 trillion yen. The company enjoys an extremely high profit rate thanks to its near monopoly position. Akahata pointed out that Apple shifted more than 90% of its operating profits to shell companies in Ireland and other tax havens apparently with the aim of reducing the amount of the pre-tax profit and paying less tax.

In FY 2011 (from October 2011 to September 2012), for example, the Apple group posted an operating profit of 165.2 billion from sales in Japan, but Apple's Japan subsidiary reported a pre-tax profit of only 12 billion yen or 8% of the actual gain. Akahata suspects that the remaining 92% was moved to the tax haven, namely Ireland, and that Apple also used this tactic during the other nine years.

Akahata requested a comment on the calculation from Apple headquarters in the U.S. and the Japanese subsidiary, but received no response so far.